COMMITMENT TO SOUND GOVERNANCE

Given the vital role of banks in the Lebanese economy and the importance of good governance for the successful operation of these institutions, the following guidelines were developed in adherence with the policies set forth by Banque du Liban, the Banking Control Commission and the Association of Banks in Lebanon. Bank of Beirut’s Corporate Governance is driven by the Board of Directors’ principal duty to act in good faith, with prudence, and in accordance with a set of values and standards selected to safeguard stakeholder interests. Bank of Beirut (the “Bank”) has been operating in Lebanon since 1963; its current management assumed responsibility in 1993. It is currently one of Lebanon’s leading banks: ranked first in capitalization level, assets quality, trade finance, and asset management. The Bank targets commercial, retail and capital markets, and its rigorous corporate governance aims to ensure efficient credit, market and operational risk management. Today the Bank is present in eleven countries and conforms to strict local, regional, and international regulations.

GOVERNANCE FRAMEWORK

Bank of Beirut operates under corporate governance policies and practices designed to ensure that the Bank’s performance maximizes long-term shareholder value.

The Governance framework of the Bank is outlined in the “Corporate Governance Guidelines” and the charters of the Board Audit Committee, the Board Risk & Compliance Committees, the Board Remuneration & Nominations Committee and the Board Credit Committee, all of which are subject to continuous review. These guidelines hinge on the evolving needs and expectations of depositors, regulators, investors and the market at large.

The Bank’s Corporate Governance Framework addresses key concepts pertaining to the Board itself, in terms of its function and composition, to the individual directors, in terms of their responsibilities and qualifications, in addition to the corresponding Committees that are derived from the Board.

OVERVIEW OF THE BOARD OF DIRECTORS

Function

Bank of Beirut s.a.l. is managed under the direction and oversight of the Board of Directors, whose main role is to supervise management, exercise business judgement, and act in good faith. Each Board Member is expected to work in the best interest of the various stakeholders.

Composition

As per the Bank’s Articles of Association, the Board of Directors cannot comprise of less than three members or more than twelve, each holding a minimum of 100 shares. Board Members are elected for a period of three years by the Ordinary General Assembly. The number of terms for which an individual board member may be elected is unlimited. In pursuant to BDL Basic Circular No. 118, the Board of Directors is composed of a majority of non-executive and independent members, leaving only two executive Directors. There is no limitation regarding the membership of the Board of Directors.

Board Meetings

The Board sets formal meetings at least quarterly where the majority of Directors are expected to attend to constitute a quorum for the transaction of business, and thus constitute the act of the Board. It is the responsibility of the Chairman – Chief Executive Officer to establish an agenda for each meeting and ensure that sufficient time is allocated to address issues. It is also customary to summon board members one week in advance of the set meeting date.

Qualifications

Board Members are selected based on their ability and willingness to commit adequate time to the bank, unquestionable integrity, and a prominent professional background that will prove to be of optimal benefit to the bank.

BOARD OF DIRECTORS RESPONSIBILITIES

The board’s responsibilities towards Bank of Beirut include but are not limited to:

setting and overseeing the implementation of the Bank’s Business Objectives and Strategy;

Although the ultimate responsibility for the management of the bank lies with its Board of Directors, the board may see fit to delegate various duties to Senior Management and their respective committees. In this respect, Senior Management is responsible for managing the day-to-day operations of the bank. The Board remains responsible for approving the charters of the various committees and monitoring their performance.

SENIOR MANAGEMENT COMMITTEES

Eighteen management committees currently operate at the Bank, each functioning according to its own charter, focus on specific day-to-day operations of the Bank:

Asset/Liability Management Committee

Credit Committee

Credit Committee for Financial Institutions

Anti-Money Laundering and Counter-Financing of Terrorism Committee

Asset Recovery Committee

Real Estate Committee

Foreign Affiliates Committee

Retail & Branches Committee

Products & Packages Committee

Marketing & Communication Committee

Cross Selling Committee

Human Resources Committee

Information Technology Committee

Investment Committee For Funds And Structured Products And Derivatives

Procurement Committee

Business Continuity Committee

Operational Risk Management Committee

Information Security Committee

THE BOARD OF DIRECTORS' OWN GOVERNANCE STRUCTURE AND PERFORMANCE

Board Committees

The Board Audit Committee

consists of at least three non-executive Directors and is scheduled to meet at least 4 times per year. The BAC aims to promote compliance with regulatory requisites as well as integrity of financial statements and reports. The BAC also assists the Board in fulfilling oversight responsibilities for the proficiency, independence and objectivity of both external and internal auditors, internal control system effectiveness, and the review of audit reports issued by internal audit.

The Board Risk & Compliance Committee

The Board Risk & Compliance Committee (BRCC) comprises of at least three non-executive Directors and is scheduled to meet at least 4 times a year. The BRCC evaluates and manages all key business risks by administering policies and procedures and formulating a strategy for the assumption of risk and the management of capital that align with the business objectives of the Bank, annually reviewing and recommending to the Board the Internal Capital Adequacy Assessment Process (ICAAP) document, developing an internal risk management framework, and ensuring that the Bank conforms to Basel requirements.

The Board Credit Committee

The Board Credit Committee (BCC) is the highest credit approval authority at the bank, and its main function is the Approval/Ratification of all the commercial credit requests presented to it and which amount to USD 3,000,000 or more.

Board Remuneration & Nominations Committee

The Board Remuneration & Nominations Committee consists of at least three non-executive Directors and will typically meet on a semi-annual basis to set the overall principles and parameters of the Bank’s remuneration policy and advising the Chairman and the Board on profile and credentials to consider in prospective Board Members.

The Board recognizes its collective responsibility for ensuring the success of the bank, which is mainly defined by its performance. To ensure optimal results, the Board conducts annual self-assessments to determine if it, as a whole, or its respective committees are functioning effectively. Similarly, Board and Senior Management committees also undergo self-evaluation to the same purpose.

ETHICAL STANDARDS

As part of a Board Member’s initial qualifications, various ethical standards should be met upon election and throughout the period spent serving on the Board of Directors. In terms of conflict of interest, members must avoid any action that contradicts with their duties towards the bank. A Board Member’s Duty of Care lies with respect to the actions taken with the utmost highest level of business judgement, good faith, and prudence. As a means to exercise Duty of Loyalty, a Board Member is expected to disclose any conflicts of interest to the Chairman.

DISCLOSURE AND TRANSPARENCY

The Board is required to take all adequate and reasonable steps to disclose its governance structure through its annual reports and on its website to enable various stakeholders to assess the effectiveness of the bank’s management practices.

The Bank has established a Code of Conduct Policy divided into seven major themes: General Principles, Business Ethics, Confidentiality, Conflicts of Interest, Business Relationships, Protection of the Bank’s Assets and Whistleblowing. It is the Board’s prerogative to ensure that these tenets are observed by its directors, managers, and employees alike.

Bank of Beirut (UK) Ltd, Frankfurt Branch is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority, by the Prudential Regulation Authority (Firm Reference Number 219523)

Bank of Beirut (UK) Ltd., Frankfurt Branch owns the creditworthiness seal awarded by Creditsafe, one of the world's most frequently used supplier of company's credit reports, an attribute that stands for affirmation of the trustworthiness and financial strength of Bank of Beirut (UK) Ltd, validated by an independent rating agency.